How much of the contributions made to employees SEP-IRAs may be deducted on the businesss tax return?
The most that may be deducted on a business’s tax return for contributions to the employees’ SEP-IRAs is the lesser of the contributions or 25% of the compensation (compensation for each employee is limited to $230,000 for 2008, $245,000 in 2009 and subject to annual cost -of-living adjustments for later years) paid to all the participants during the year. Elective deferrals made on behalf of the employees are not subject to the 25% of compensation limit. Self-employed individuals must make a special computation to figure out their maximum deduction for these contributions. When figuring the deduction for contributions made to the SEP-IRA, compensation is net earnings from self-employment which takes into account the following deductions; (a) the deduction for one-half of self-employment tax and (b) the deduction for contributions to the SEP-IRA. See the Instructions to Form 5305A-SEP and Pub 560 for details on determining this deduction.
The most that may be deducted on a business’s tax return for contributions to the employees’ SEP-IRAs is the lesser of the contributions or 25% of the compensation (compensation for each employee is limited to $225,000 for 2007, $230,000 in 2008 and subject to annual cost -of-living adjustments for later years) paid to all the participants during the year. Elective deferrals made on behalf of the employees are not subject to the 25% of compensation limit. Self-employed individuals must make a special computation to figure out their maximum deduction for these contributions. When figuring the deduction for contributions made to the SEP-IRA, compensation is net earnings from self-employment which takes into account the following deductions; (a) the deduction for one-half of self-employment tax and (b) the deduction for contributions to the SEP-IRA. See the Instructions to Form 5305A-SEP and Pub 560 for details on determining this deduction. 27. Where do sole proprietors report employee e
Related Questions
- How much of the contributions made to employees SIMPLE IRAs may be deducted on the businesss tax return?
- How much of the contributions made to employees SEP-IRAs may be deducted on the businesss tax return?
- How much of the contribution made to employees SEP-IRAs may be deducted on the businesss tax return?
